3 minute read 10 Mar 2017
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How to manage disruptions to gain competitive advantage

By

EY Global

Multidisciplinary professional services organization

3 minute read 10 Mar 2017
Related topics Life sciences Disruption Risk

Life sciences is in an era of continuous change, which requires regular, robust and well-organized risk assessment and prioritization.

Are you ready for the new realities?

We have entered an era of profound transformation in life sciences. The landscape is changing rapidly. Managing through — and thriving in — this era of continuous change requires regular, robust and well-organized risk assessment and prioritization.

EY projects that by 2025 many life sciences companies will have transitioned toward more integrated commercial business models, offering products and services designed to improve outcomes and addressing the specific needs of a broad array of customer groups.

This will involve developing more outcome-based contracting models and instilling a patient-centric corporate culture. Mass customization, enabled by continuous technological advancements and a host of new health care players, will characterize the market. Regulatory compliance will be more complex, yet still critical to consumer trust and competitiveness.

Old reality 2005

Push branded products to patients

 

New reality 2025

Chase outcome-based health solutions and satisfy the

empowered health consumer

Value creation from sales of branded pharmaceuticals

New commercial model (integrated system)

Integrated global health care (HC) provider creates value along the health care delivery continuum by offering therapeutic and preventive solutions.

Corporate culture focused on maximizing drug sales volume and price

Outcome-driven, patient-centric corporate culture

Evolution toward a flatter corporate culture is focused on achieving profitability through enhancing patient outcomes. 

Mass generalization: focus on blockbuster drugs with low/no technology usage 

Mass generalization to mass customization

Technology, innovation and network-based R&D incubate outcome-based and patient-centric health solutions, comprising not only drugs but also support services and technologies.

IT infrastructure as process enabler

New digital ecosystem

Technological, data-driven advances are building a new digital ecosystem and delivering new kinds of value.

High pricing power through size, global infrastructure and branding

New market entrants disrupting health care delivery

Pharma’s competitive positioning and pricing power will be challenged by new, fast-moving market entrants and by the expectations of empowered consumers.

Regulatory and compliance requirements limited mainly to drug safety and efficacy

Regulatory compliance: complex yet critical

Regulatory compliance will be more complex, yet critical to gaining competitive advantage and building trust.

Risk-mature organizations will leverage this disruption to gain competitive advantage by proactively identifying, assessing, managing and monitoring risks to achieve differentiated success in this bold new world.

Key strategic risks that can drive differentiated success if managed proactively during the journey are:

  • Achieving the requisite ROI from “around-the-pill” services offered to patients
  • Managing cultural change to define and sustain patient-centricity
  • Addressing structural inefficiencies in existing IT operations and making the right technological investments
  • Quantifying the value and cost of digital transformation and complying with a complex cybersecurity legal landscape
  • Deciding strategically whether to compete or partner and then selecting the best partners
  • Managing third-party risks across an increasingly complex portfolio of contractual relationships
  • Clearly defining intellectual property (IP) ownership in partnerships with new health care players
  • Instilling flexibility and agility in the supply chain to deal with mass customization
  • Managing an uncertain geopolitical climate and continuously monitoring new regulatory requirements across the globe

The way forward for organizations is to become “risk-aware” and embed “sustainable solutions” to:

  • Comprehensively identify and assess risks (strategic, preventable and external) that can help draw the most value and benefits from managing and addressing them in the short and long term
  • Establish a well-defined road map and design solutions that prevent, balance or limit risk across the organization
  • Embed risk considerations into the rhythm of the business, including the strategic planning process, resulting in risk-informed initiatives and programs
  • Shift the management approach from being risk-averse to being risk-aware, turning risks into performance

For further insights, Life sciences 2025 — managing disruptions to gain competitive advantage: driving risks to results  discusses the top six trends shaping the new market dynamics for 2025 and the associated risks. Its purpose is to drive companies early toward risk assessment and planning for what’s likely to be a very different future.

Summary

Risk-mature organizations will leverage disruption to gain competitive advantage by proactively identifying, assessing, managing and monitoring risks to achieve differentiated success in this bold new world.

About this article

By

EY Global

Multidisciplinary professional services organization

Related topics Life sciences Disruption Risk